As the hype about AI continues to rock the tech world, the rivalry between AMD and Nvidia is also heating up. However, one of them holds a massive lead.
Today, Nvidia is the most valuable company in the world, thanks to its advancements in AI. However, this landscape could have looked vastly different if one pivotal event in the mid-to-late 2000s had unfolded differently.
Nvidia's CEO Jensen Huang delivers his keystone speech ahead of Computex 2024 in Taipei on June 2, 2024. Computex is the top annual tech showcase in Taiwan, whose advanced semiconductor industry is crucial to the production of everything from iPhones to the servers that run ChatGPT. Photo by SAM YEH/AFP via Getty Images
Missed Nvidia-AMD Merger Opportunity
According to insiders (via Tom's Hardware), AMD was on the brink of purchasing Nvidia during its early days. This revelation came to light through Hemant Mohapatra, a former AMD engineer, who detailed the near acquisition on X.
So now that Nvidia has far outstripped the market cap of AMD and Intel, I thought this would be a fun story to tell. I spent 6+yrs @ AMD engg in mid to late 2000s helping design the CPU/APU/GPUs that we see today. Back then it was unimaginable for AMD to beat Intel in market-cap… pic.twitter.com/bYCS5vY0QO
— Hemant Mohapatra (@MohapatraHemant) July 5, 2024
At the time, Hector Ruiz who was AMD's CEO from 2002 to 2008, approached Nvidia's CEO, Jensen Huang, with an enticing proposal. AMD, struggling to compete against Intel, saw an opportunity to join forces with Nvidia to strengthen its position in the market.
The deal seemed promising, but a major hurdle emerged during negotiations. Hector Ruiz wanted to lead the combined entity, but Jensen Huang had other plans.
Huang insisted on retaining the CEO position in the merged company, believing his vision and strategies were crucial for Nvidia's success. "AMD almost bought Nvidia but Jensen wasn't ready to sell unless he replace Hector Ruiz of AMD as the CEO of the joint company," Mohapatra recounted.
What Happened Next?
Jensen Huang's refusal to relinquish control of Nvidia was not merely a power play; it was rooted in his strategic vision for the company.
Mohapatra also said that Huang had a long-term plan to lock Nvidia's GPU technology to the proprietary and closed-source CUDA model. This strategy was pivotal in positioning Nvidia as a leader in the AI and GPU markets.
Faced with Huang's ultimatum, AMD opted to abandon the merger and instead acquired ATI, bringing the Radeon brand under its umbrella. This move allowed AMD to continue its pursuit of innovation in the GPU market, though it missed the chance to merge with Nvidia.
The decision to keep Nvidia independent proved to be a great one. Nvidia's market value has since skyrocketed, surpassing $3 trillion, a milestone achieved last month.
In recent months, Nvidia has also overtaken tech giants like Apple and Microsoft to become the world's most valuable company.
The company's revenue tripled in the most recent fiscal quarter compared to the previous year, reaching $26 billion. Projections for 2025 estimate Nvidia's revenue will be near $117 billion, with a net margin of 53.4%, underscoring its profitability.
Despite not acquiring Nvidia, AMD has also seen significant growth. In March 2024, a rally in semiconductor stocks pushed AMD's valuation above $300 billion for the first time in its history.
